Payment protection insurance

A payment protection insurance ( also referred to as credit life or credit life insurance ) is a hedge of the borrower or his surviving dependents in case of death, illness or unemployment. It also serves as the lender as additional collateral and is assigned as such in the loan agreement to the bank. In Germany in 2009, the average amount of the new balance insurance 11,600, - €. At the signing of the life insurance payment protection insurance in 2009 had a market share based on the insured amount of 2.9%.

Subject of the payment protection insurance (RSV )

Borrower or lender close in connection with the borrowing on the person of the borrower - and mostly at his own expense - an insurance policy, for example, against death ( death ), illness / incapacity or unemployment during the repayment period. In case of death the outstanding outstanding balance of the loan taken will be repaid by the insurance benefit or paid the installments due in case of illness or unemployment. The borrower usually occurs one by the lender ( or credit intermediary ) completed group insurance contract with, by the conclusion of the individual borrower is not subject to the same formal rules ( esp. those of the SG Insurance Contract Act ) as an ordinary individual insurance contract.

The RSV was developed in the 1950s in the United States. 1957 was approved by the Federal Supervisory Office for Insurance in Germany, the first RSV. With installment loans and annuity RSV is typically in return for a ( co-financed by the loan ) Once finished article. With overdraft or revolving credit loans, the contracts are designed so that for each month of the outstanding balance is determined and for each of the post for this month is calculated.

Meanwhile various forms to hedge other risks are offered: After the classic RSV risks of death and disability insurance against the risk of involuntary unemployment in 1995, and since 2006 is " serious diseases " (cancer, heart attack, stroke, etc. ) and various assistance services ( assistance ) was introduced to assist the Borrower to reintegrate into the workforce.

Criticism / disadvantages

The RSV is often criticized because of the amount of contributions and coupled with the credit sales method. In fact, RSV posts usually contain relatively high commissions for the creditor or credit intermediary. Because of the considerable cost of such insurance, this can affect the overall cost of borrowing noticeable.

Only a few banks in the financial statements of RSV leads to an improved credit score. Writes the lender before that mandatory payment protection insurance has to be completed, so the cost of RSV under German law are to be included in the effective interest rate. Most of the statements of RSV is optional but offensively offered by many lenders in order to earn additional profit contributions through the acquisition commission.

Also be criticized for being contractual limitation periods for the respective insurance benefits in the RSV. These require that the insurance cover only after a certain period of time after completion of the RSV Treaty shall enter into force ( " wait" ) or the power case ( disability or unemployment) has to last a minimum period before benefits from the RSV can be claimed ( " grace period ").

Great Britain

In Britain, the sales practices of various banks led there in connection with the PPI ( payment protection insurance ) called Mortgage Life Insurance into a scandal. The residual debt insurances to have been partially obscured, with improper motive or to persons who can not take advantage of these sold. In the fall of 2012, the British financial industry had a total accrual at a height of about 10 million pounds. This sum is omitted largely on five banks: Lloyds Banking Group ( 4.3 billion pounds ), Barclays (2 billion pounds ), Royal Bank of Scotland ( 1.3 billion pounds ), HSBC ( 1.1 billion pounds ) and Santander UK (700 million pounds). At least 6.5 billion pounds sterling to compensations were paid according to estimates by the Financial Services Authority.

Benefits

One advantage of the RSV is the lack compared to individual insurance acceptance and health inspection, which allows the necessary simplified and rapid conclusion. However, most insurance claims due to existing and known at the conclusion of pre-existing conditions during the first two years of the contract RSV are excluded from power. The protection is for existing medical conditions so limited at this time to not vorerkrankungs - causal disease / disability or cause of death. In addition, only the RSV offers a private legal protection against the risk of involuntary unemployment.